Procurement’s central objective is to cut down on costs wherever possible while increasing efficiency and creating cost savings.  

However, if an organization is plagued by maverick or rogue spending, all these efforts turn to dust.

The dangers of maverick spending go beyond immediate costs, creating compliance risks, eroding supplier relationships, and affecting your business intelligence.

So no, it’s not just about stopping ad-hoc purchases.

It’s about moving toward a culture of compliance.

Eager to move forward?

We’ve prepared 6 tips that will help you reign in maverick spending.

If you’re ready to build strong foundations for procurement success, keep reading! 

Find Out Why Maverick Spend Happens

For starters, you need to find out why maverick spending is happening in the first place.

Diving into the root causes of maverick spend in your organization is necessary if you want to address the problem effectively.

Otherwise, you’d quickly find yourself treating surface-level problems, while deep-seated issues remain unsolved.

The Hackett Group’s seminal study on maverick spend identified the top causes behind these behaviors, including the lack of self-service or guided buying tools, and non-compliant mentality.

Illustration: Veridion / Data: The Hackett Group

These findings are very telling because we can intuitively divide the causes into two broader categories: management-related and employee-related.

An employee’s tendency towards non-compliance or simple resistance to change certainly plays a role in their “going rogue”, but the reality is much more complex than laziness or ill intent.  

Some of your procurement processes may be superficially explained, or you simply lack procedures or tools in necessary places.

In other words, by not doing enough to curb maverick spending you’re effectively enabling it.

So, how do you go about mapping and closing these gaps?

The answer is by collecting data and conducting spend analysis.

Sure, you may have picked up on dozens of cases of maverick spending across multiple departments, but without proper analysis you can’t detect patterns and gain deeper insights.

As pointed out by Amer Nizamuddin, the Founder of WisdomQuant and formerly a Chief Delivery Officer, a thorough analysis of your spend data will reveal hidden expenses.

Illustration: Veridion / Quote: LinkedIn

More importantly, once you understand why these expenses happened in the first place you can introduce and enforce policies that will effectively counter unchecked spending.

In essence, once you take a closer look at your data, you’ll gain a better understanding of why maverick spend happens and be one step closer to reducing it.

Establish Clear Procurement Guidelines

Establishing clear procurement guidelines helps avoid misinterpretation and confusion that contribute to unapproved purchases.

Clearly defined procurement guidelines provide the necessary structure for implementing key procurement policies and ensure that all employees are on the same page.

In other words, clarity ensures understanding, which in turn encourages adherence to correct purchasing procedures, thereby minimizing maverick spend.

So, what are the key elements of well-defined procurement guidelines?

No matter if you’re creating a broader document like a procurement strategy or a more specific and practical list of procedures, there are a couple of things you should pay attention to, starting with the language.

Source: Veridion

Long and winding sentences, technical jargon, and more formal, passive voice leave room for ambiguity and confusion, and are sure to discourage employees who are unfamiliar with procurement objectives and procedures.

Since your goal is to make the guidelines as accessible as possible, you need to use plain language, give examples and definitions for key terms, and present information visually wherever possible.

Nefco, a Nordic Green Bank, does a good job in this regard. In their procurement policy document, they define a list of terms.

Source: Nefco

You may be tempted to include as much information as possible and account for every procurement scenario, but this actually gets in the way of overall clarity.

The devil may be in the details, but if it takes too much time to look up something and find the information you need, you’re actually increasing the chances of maverick spending.

After all, procurement documentation is meant to secure widespread compliance.

Therefore, experts agree with us on the notion of simple documentation. Here’s what James Mead, a Digital Procurement Advisor and Founder of Procurement Software, has to say.

Illustration: Veridion / Quote: LinkedIn

Naturally, creating and testing the guidelines is just one part of the process.

Newly adopted documentation needs to be shared across the organization, and also reviewed periodically to ensure ongoing relevance.

Ultimately, clarity matters in all these processes.

Remember to use the elements we listed above, and everything should run smoothly, helping you counter maverick spend.

Educate the Employees About the Issue

Cutting down on maverick spend won’t be easy if the employees don’t know they’re creating problems by buying from unapproved vendors.

This is why it’s essential to educate your employees about the consequences of maverick spend.

You may find yourself thinking: But I’m already circulating procurement guidelines, doesn’t that cover the issue?

The truth is that guidelines tell your employees how to stick to procurement processes, rather than why they should do it.

And if you need inspiration about how to explain the dire consequences of their actions, the following data may help.

Here are some of the biggest consequences of maverick purchases, as shown in the Hackett Group’s 2019 report.

Illustration: Veridion / Data: The Hackett Group

Employees outside of the procurement team may be unaware of the range of complications that can arise from maverick spend, and thereby focus only on (perceived) cost-savings.  

For example, ordering cheaper latex gloves from a different supplier might seem very cost-effective.

However, if those gloves don’t meet the necessary specifications, they could violate compliance standards or even compromise safety.

Fortunately, such oversights can be avoided by insisting on regular training sessions and workshops that underline the importance and benefits of complying with procurement policies.

The value of these educational efforts is best evidenced by some additional findings on the difference between industry leaders and other companies.

When it comes to implementing training on buying processes and policies, the Hackett Group’s report shows that industry leaders put more emphasis on employee education.

Illustration: Veridion / Data: The Hackett Group

The gap is particularly noticeable when it comes to online training, with industry leaders staying well ahead of their peers.

Education paves the way to greater accountability and empowerment among employees, which is why it’s no surprise that industry leaders stand out from their peers.

Therefore, if you want to stand alongside the great and successful, educate your people about the consequences of their maverick behavior.

Create a Preferred Supplier List

Having a list of vetted, approved vendors discourages employees from coming up with their own alternatives, helping you control costs and maintain quality.

Creating a preferred supplier list (PSL) is a proactive approach to controlling maverick spend which prioritizes the most beneficial supplier relationships.

At the same time, it is an important aspect of providing assistance for buyers or end-users.

PSL lists are developed based on approved vendor lists (AVL) which are made using a variety of criteria such as:

• technology,
• product’s functional fit,
• financial stability, and
• supplier’s past performance.

Creating this supplier list doesn’t just curb maverick purchases, but it is another way to propel your company forward because that’s what successful companies do.

In fact, over half of the top-performing organizations surveyed by the Hackett Group ensure their employees have access to a list of pre-approved suppliers.

Illustration: Veridion / Data: The Hackett Group

On the other hand, only 26% of peer group companies do the same, making it more likely that their employees will look for alternatives on their own.

Having a PSL list goes a step further by stating a preference for those suppliers who have proven themselves to be the best among the approved vendors.

Whether it’s due to performance, pricing, or relationship advantages, these suppliers are given priority for contracts. Then, anyone needing to make a purchase knows exactly who to reach out to first.

And since procurement teams are encouraged to use them whenever possible, this strengthens the partnership further, yielding new benefits.

Alright, but what if the preferred supplier pool doesn’t answer the current needs?

Periodic reviews should prevent this, but if you find yourself needing to expand your supplier pool you can turn to eSourcing tools.

According to SDC Exec’s research, 75% of buyers believe these tools are essential for identifying a broader pool of suppliers.

One such solution is Veridion.

Our AI-driven sourcing service accelerates supplier discovery, producing double the candidates in significantly less time than if you were relying on a manual search.

Source: Veridion

Veridion’s expansive, global database offers access to over 60 data points on 100+ million companies, thereby driving both sourcing and data enrichment efforts.

Whatever your current needs are, relying on our weekly updated data is sure to lead you to the best possible suppliers.

In the end, pinpointing and promoting the right suppliers across the entire company is a surefire way of minimizing maverick spend.  

Simplify the Purchasing Process

Simple processes and procedures are easier to navigate, making them more appealing to employees who would otherwise be tempted to bypass established procurement channels.

A procurement system that is too complex invites off-contract purchases, eroding your control over spend.  

On the other hand, minimizing unnecessary steps by removing redundancies, consolidating forms, and offering easy access to supplier lists helps users complete their tasks faster.

Consequently, streamlined processes free up time for employees to focus on value-added activities.

So, how do you get there?

The starting point of your journey toward simpler processes is to adopt an intuitive, easy-to-use procurement platform.

Strategic sourcing expert, Mukesh Negi, underlines that the benefits of these collaborative platforms include improved collaboration, fast responses, and overall visibility.

Illustration: Veridion / Quote: LinkedIn

And if users can quickly find their way to information on preferred suppliers and products, there is no incentive to step outside the system and make purchases elsewhere.

These procurement platforms offer a single, accessible spot for managing purchase requisitions, order processing, suppliers, stakeholders, and more.

One such centralization example is Pipefy’s Procure-to-Pay software.

Source: Pipefy on Youtube

Boosting overall visibility, accountability, and collaboration across your procurement team and other stakeholders is largely achieved by optimizing workflows.

By strategically eliminating redundant or non-essential stages, you’re one step closer to getting all employees on board with your procurement policies.

After all, a well-designed, easy-to-use system encourages proper purchasing behavior but it also creates consistency.

In that way, simplicity ensures compliance becomes standard practice across all departments, rather than exception.

Speed Up the Purchase Approval Process

Delays in approval processes may push employees to make unauthorized purchases, which is why speeding them up encourages the use of proper procurement channels.

Impatience and availability of quicker alternatives are common causes of maverick spend.

This is especially true if purchase requests are time-sensitive.

Luckily, leveraging technology to automate approval workflows is one way of maintaining control and compliance while delivering a significant speed boost.

Travel management company Key Travel delivered exactly that for its University client by accelerating the purchase order (PO) approval process.

Their client’s main pain point was a slow internal system for (PO) approval which required multiple follow-ups and often resulted in travel bookings being sold out.

The PO delays impacted the budget by as much as 30% per booking, also causing significant frustration among users.

So Key Travel decided to automate and simplify their workflow. This resulted in several performance improvements, as well as notable cost savings.

Illustration: Veridion / Source: Key Travel

Besides expediting approvals and minimizing delays, they had other benefits.

For one, reduced manual follow-ups prevented rework from Finance, freeing up their time to focus on more strategic tasks.

So everyone benefited from that change.

Automation tools bring those benefits through different capabilities, such as:

Real-time insights	Speed up decision-making and boost transparency through real-time insight into approval status
Threshold flexibility	Reduce review time for smaller transactions by adjusting approval thresholds based on purchase value
Escalation rules	Minimize bottlenecks by setting clear rules for escalation in cases when approvals are delayed

All in all, automation features line up together to help you better manage and streamline purchasing approvals.

Your company might not face the same issues as a travel management one, but faster approvals can help anyone in discouraging maverick spending and supporting strategic procurement.

Conclusion

It’s clear that tackling maverick spend goes in several directions, from analyzing spend data to using procurement technology.  

Together, these actions create a strong framework for driving compliance and managing spend more effectively.

However, true success is to adopt a strategic approach that helps you redefine processes and addresses the underlying causes behind maverick spending.

Ultimately, by empowering employees to recognize the value of following procurement procedures, you’re doing more than countering rogue spending—you’re setting your business up for greater success and growth.